@ Copyright 29 October 2018. All rights reserved. This summary has been prepared very rapidly and is for general information only. The proposals are in any event subject to amendment before the Finance Act. You are recommended to seek competent professional advice before taking any action on the basis of the contents of this publication.

INTRODUCTION

“…austerity is coming to an end – but discipline will remain” were the words the Chancellor, Philip Hammond, used to summarise his October Budget speech. That balance between continued cuts and excessive borrowing was evident in the measures announced today. The Office for Budget Responsibility (OBR) forecast that borrowing in 2018/19 will be £11.6 billion less than it forecast in March. But the Chancellor’s net tax giveaway for 2019/20 was only marginally higher at £15.1 billion, rising to over £30.5 billion by 2023/24. A large slice of that apparent generosity is down to increased NHS expenditure, which starts at £7.35 billion in 2019/20, rising to £27.6 billion by 2023/24.

Mr Hammond was helped by the OBR increasing growth forecasts for the next two years, although it left the 2018 figure unchanged at 1.3%. A good example of Mr Hammond’s balanced approach was bringing forward the £50,000 higher rate threshold and £12,500 personal allowance to 2019/20 rather than 2020/21, as originally promised in the 2017 Conservative manifesto. Accelerating these changes only gives rise to a one-year cost because the personal allowance and higher rate threshold will be frozen in 2020/21.

Several other headline-grabbing measures also have a temporary effect on closer examination. The one-third cut to business rates for some retail properties will last for just two years, as will the increase in the annual investment allowance (AIA) to £1 million.

The rosier outlook from the OBR might change by the time the Chancellor is next due to present a fiscal set piece – his Spring Statement. As he said in his speech, he was “reserving the right to upgrade the Spring Statement to a full fiscal event” if “the economic or fiscal outlook changes materially in-year”.

PERSONAL TAXATION

Main personal allowances and reliefs

2019/20

2018/19

Personal allowance1

£12,500

£11,850

Married couples’ / civil partner’s transferable allowance

£1,250

£1,190

Married couples’/ civil partners’ allowance at 10%2

(if at least one born before 6/4/35)

maximum

£8,915

£8,695

minimum

£3,440

£3,360

Blind person’s allowance

£2,450

£2,390

Rent-a-room tax-free income

£7,500

£7,500

Registered pension scheme

· Lifetime allowance

£1,055,000

£1,030,000

· Money purchase annual allowance

£4,000

£4,000

· Annual allowance3

£40,000

£40,000

1 Personal allowance reduced by £1 for every £2 of adjusted net income over £100,000.

2 Reduced by £1 for every £2 of adjusted net income over £29,600 (£28,900 for 2018/19), until the minimum is reached.

3Subject to 50% taper down to £10,000 if threshold income is over £110,000 and adjusted income is over £150,000.

Scottish taxpayers’ non-dividend, non-savings income5

2019/20

2018/19

19% starter rate on income up to

TBA

£2,000

20% basic rate on next slice of income up to

TBA

£12,150

21% intermediate rate on next slice up to

TBA

£31,580

41% higher rate on next slice up to

TBA

£150,000

46% top rate on income over

TBA

£150,000

Income tax rates and bands

UK excluding Scottish taxpayers’ non-savings income

2019/20

2018/19

20% basic rate on income up to

£37,500

£34,500

40% higher rate on income over

£37,500

£34,500

45% additional rate on income over

£150,000

£150,000

All UK taxpayers

Starting rate at 0% on savings income up to4

£5,000

£5,000

Savings allowance at 0% tax:

basic rate taxpayers

£1,000

£1,000

higher rate taxpayers

£500

£500

additional rate taxpayers

£0

£0

Dividend allowance at 0% tax – all individuals

£2,000

£5,000

Tax rates on dividend income:

basic rate taxpayers

7.5%

7.5%

higher rate taxpayers

32.5%

32.5%

additional rate taxpayers

38.1%

38.1%

4 Not available if taxable non-savings income exceeds the starting rate band.

5 To be announced – Scottish Budget to be published on 12 December 2018.

Trusts2019/20 2018/19

Standard rate band generally £1,000 £1,000

Dividends (rate applicable to trusts) 38.1% 38.1%

Other income (rate applicable to trusts) 45% 45%

Child benefit charge: 1% of benefit per £100 of income between £50,000 and £60,000.

PERSONAL TAXATION

Income tax

The personal allowance will increase to £12,500 and the higher rate threshold will rise to £50,000 for 2019/20. From 2021/22, the personal allowance and higher rate threshold will increase in line with inflation. The Scottish tax bands and rates for non-savings, non-dividend income will be announced in the Scottish Budget, due on 12 December.

saver

Don’t lose your personal allowance. Your personal allowance of £12,500 in 2019/20 is reduced by 50p for every pound that your income exceeds £100,000. You could make a pension contribution or a charitable gift to bring your income below £100,000.

Off-payroll working in the private sector

Following consultation and the roll-out of reform in the public sector, responsibility for

operating the off-payroll working rules in the private sector will move from individuals to the organisation, agency or other third party engaging the worker. The change will take effect from April 2020, with an exemption for small organisations.

Rent-a-room relief

Following consultation, there will be no new ‘shared occupancy test’ for rent-a-room relief and the existing qualifying test of letting in a main or only residence will remain.

Employment allowance

From April 2020, the employment allowance of £3,000 a year will be restricted to employers with an employer national insurance contributions (NICs) bill below £100,000 in their previous tax year.

National insurance contributions

As announced in September, Class 2 NICs will not be abolished during this Parliament. Reforms to the treatment of termination payments and income from sporting testimonials will be legislated for in the National Insurance Contributions Bill, with changes taking effect from April 2020.

Car benefit scale

The petrol car benefit charge for 2019/20 is based on CO2 emissions in grams per kilometre and the car’s list price when new. For diesel vehicles, add 3% to the scale up to 37% maximum. The scale for 2019/20 is as follows:

CO2 g/km

0-50

51-75

76-94

95 and above

Charge

16%

19%

22%

23% + 1% for each extra 5g/km over 95g/km up to max. 37%

Short-term business visitors

Eligibility for the special PAYE tax and administrative treatment of short-term business visitors from overseas branches of UK-headquartered companies will be widened from April 2020, and the deadlines for reporting and paying tax will be extended.

PENSIONS, SAVINGS AND INVESTMENTS

Individual savings account (ISA) subscription limits

The ISA annual subscription limit for 2019/20 will remain at £20,000. The annual subscription limit for junior ISAs (JISAs) and child trust funds (CTFs) for 2019/20 will rise to £4,368.

Lifetime allowance for pensions

The lifetime allowance for pension savings will increase to £1.055 million for 2019/20. There is no change to the annual allowances.

The rules for approved EIS funds will be amended to require approved funds to focus on knowledge-intensive companies with effect from April 2020. The funds will also have a longer period in which to invest capital. Investors in these funds will be allowed to set this income tax relief against their liabilities in the year before the fund closes.

1 Investment above £1,000,000 must be in knowledge-intensive companies

Pensions for the self-employed

This winter the Department for Work and Pensions will publish a paper setting out the government’s approach to increasing pension participation and savings persistency among the self-employed. The paper will focus on expanding evidence through a programme of targeted interventions and partnerships.

think ahead

The lifetime allowance will rise by £25,000 from 6 April 2019. If you plan to draw from your pensions and already have funds exceeding the current £1.03 million lifetime allowance limit, you may want to wait before taking your pension benefits.

think ahead

The dividend allowance and personal savings allowance will be frozen for 2019/20. Your ISA allowance is £20,000 in 2018/19 and 2019/20.

CAPITAL TAXES

Capital gains tax: annual exempt amount

The annual exempt amount for individuals and personal representatives will rise to £12,000 for 2019/20, while the amount for most trustees will increase to £6,000 (minimum £1,200).

Entrepreneurs’ relief

From 6 April 2019, the minimum period throughout which the qualifying conditions for the relief must be met will increase from 12 to 24 months.

From 29 October 2018, shareholders claiming entrepreneurs’ relief must be entitled to at least 5% of the distributable profits and net assets of a company, in addition to the current requirements on share capital and voting rights.

As announced at the 2017 Autumn Budget, individuals can qualify for entrepreneurs’ relief where their shareholding is diluted below the 5% qualifying threshold by fund-raising events after 5 April 2019.

Private residence relief

From April 2020, lettings relief will only apply where the owner of the property is in shared occupancy with the tenant.

The final period exemption will be reduced from 18 months to 9 months. There will be no changes to the 36-month final period exemption available to disabled individuals or to those in a care home.

Inheritance tax (IHT)

The IHT nil rate band remains at £325,000 for 2019/20.

The residence nil rate band (RNRB) will increase to £150,000 from 6 April 2019 as already legislated. From 29 October 2018, minor technical amendments to the RNRB will take effect relating to downsizing provisions and the definition of ‘inherited’ for RNRB purposes.

think ahead

IHT simplification is on the agenda. Now may be a good time to review making lifetime gifts before the tax rules are ‘simplified’ into something less generous.

BUSINESS TAXES

Corporation tax rate

The government has confirmed that the rate of corporation tax will fall to 17% in 2020.

Annual investment allowance

The AIA will be increased from £200,000 to £1 million for all qualifying investments in plant and machinery from 1 January 2019 until 31 December 2020.

Special rate writing down allowance

The capital allowances special rate for qualifying plant and machinery, such as long-life assets, will be reduced from 8% to 6% from April 2019.

Structures and buildings allowance

A 2% capital allowance will apply to qualifying capital expenditure on new non-residential buildings and structures where all the contracts for the physical construction works are entered into on or after 29 October 2018. Relief will not be available for the costs of land or dwellings.

Corporate losses

The tax treatment of corporate capital losses will be brought into line with the treatment of income losses from 1 April 2020. The proportion of annual capital gains that can be relieved by brought-forward capital losses will be limited to 50%. However, companies will have unrestricted use of up to £5 million capital or income losses each year.

Amendments will be made to the existing loss relief legislation to ensure that it works as intended and prevents relief being claimed for excessive carried-forward losses.

Digital services tax

A new 2% tax will be charged from April 2020 on the revenues of certain digital businesses that derive value from their UK users. The tax will apply to revenues generated from the provision of search engines, social media platforms and online market places where those activities are linked to the participation of UK users, subject to an annual allowance of £25 million.

The tax will only apply to groups that generate global revenues from in-scope business activities of more than £500 million a year. It will include a safe harbour provision that will exempt loss-makers and reduce the effective rate of tax on businesses with very low profit margins.

Company vehicles

Fuel benefit charges will increase in line with the retail prices index (RPI) and the van benefit charge will increase in line with the CPI from 6 April 2019. The fuel multiplier for 2019/20 will be £24,100 for cars. For vans, the fuel chargeable amount will be £655.

Intangible fixed assets regime

A targeted relief will be introduced from April 2019 for the cost of goodwill in the acquisition of businesses with eligible intangible property. With effect from 7 November 2018, a de-grouping charge will not arise where the de-grouping is the result of a share disposal that qualifies for the substantial shareholding exemption.

Offshore receipts in respect of intangible property

From April 2019, income from intangible property held in low-tax jurisdictions will be taxed to the extent that it can be referred to UK sales. The tax will be collected by directly taxing offshore entities that realise intangible property income in low-tax jurisdictions. There will be a de minimis UK sales threshold of £10 million and exemptions for income that is taxed at appropriate levels or supported by sufficient local substance.

Enhanced capital allowances (ECAs)

The ECA for companies investing in electric vehicle charge points will be extended to 31 March 2023. ECAs and first-year tax credits for technologies on the Energy Technology List and Water Technology List will end in April 2020. The savings will be reinvested in an Industrial Energy Transformation fund to support significant energy users to cut their energy bills and move UK industry to a low-carbon future.

Charity taxes

The upper limit for trading that charities can carry out without incurring a tax liability will rise from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000.

Charity shops using the Retail Gift Aid Scheme will be allowed to send letters to donors every three years when their goods raise less than £20 a year, rather than every tax year.

The individual donation limit under the Gift Aid Small Donations Scheme will increase from £20 to £30. This applies to small collections where it is impractical to obtain a Gift Aid declaration.

These changes will take effect from April 2019.

Plastic packaging

A tax on the production and import of plastic packaging will be introduced in April 2022. Subject to consultation, it will apply to plastic packaging that does not contain at least 30% recycled plastic. The Packaging Producer Responsibility System will be reformed to provide an incentive for producers to design packaging that is easier to recycle and penalise the use of difficult to recycle packaging, such as black plastics.

Apprenticeship levy

Levy-paying employers will be able to transfer up to 25% of their funds to pay for apprenticeships training in their supply chains.

The co-investment rate for apprenticeship levy will halve to 5%.

think ahead

Your business might be entitled to a valuable research and development (R&D) tax credit – even if it doesn’t make a taxable profit. Check out the position; you might be surprised what expenditure can qualify and how much it could be worth to you.

think ahead

Automatic enrolment pension minimum contributions increase significantly again from 6 April 2019. Make certain you – and anyone you employ – are aware of the consequences.

PROPERTY TAXES

Business rates – retail

Business rates bills will be reduced for two years from April 2019 by one-third for retail properties with a rateable value below £51,000, subject to state aid limits. This will benefit up to 90% of retail properties.

Business rates – self-catering and holiday let accommodation

The government will consult on the criteria under which self-catering and holiday lets become chargeable to business rates rather than council tax.

Business rates – public lavatories

A 100% business rates relief will be introduced for all public lavatories to help keep these amenities open.

Stamp duty land tax (SDLT)

First-time buyers’ relief in England and Northern Ireland will be extended so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. The change will apply to transactions with an effective date of 29 October 2018 and will also be backdated to 22 November 2017.

The government will publish a consultation in January 2019 on an SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.

Non-UK residents’ gains

Gains that accrue to non-UK residents on non-residential property will be subject to tax. Non-UK residents will also be subject to tax on gains in diversely-held companies, those widely-held funds not previously included, and life assurance companies. They will also be taxed on gains on interests in UK property-rich entities, such as shares in companies that derive at least 75% of their value from UK land. The measures which have been previously announced will take effect for disposals made after 5 April 2019 and there will be an anti-forestalling rule for arrangements entered into after 21 November 2017.

Annual tax on enveloped dwellings

The annual tax on enveloped dwellings (ATED) for 2019/20 will be increased in line with inflation, as detailed in the table below:

Property value

Charge for tax year
2018/19

Charge for tax year
2019/20

More than £500,000 but not more than £1m

£3,600

£3,650

More than £1m but not more than £2m

£7,250

£7,400

More than £2m but not more than £5m

£24,250

£24,800

More than £5m but not more than £10m

£56,550

£57,900

More than £10m but not more than £20m

£113,400

£116,100

More than £20m +

£226,950

£232,350

think ahead

Three-quarters of any interest tax relief for personal buy-to-let borrowing will be limited to a 20% tax credit from 2019/20. Make sure you understand the impact of this latest change on your overall tax position.

think ahead

From 6 April 2020, CGT on residential property will be payable within 30 days of sale. If you are thinking of selling buy-to-let property, the existing rules can give you up to almost 21 months before any tax bill arrives.

VALUE ADDED TAX

Registration and deregistration thresholds

The taxable turnover threshold for registration for value added tax (VAT) will remain at £85,000 until April 2022, two years longer than previously announced. The deregistration threshold will stay at £83,000 for the same period. The government will look again at the possibility of introducing a smoothing mechanism once the terms of Brexit are clear.

Vouchers

The Finance Bill 2018-19 will implement EU legislation to ensure that the correct amount of VAT is charged on what the customer pays, irrespective of whether payment is with a voucher or by other means.

Labour provision in the construction sector

A VAT domestic reverse charge will be introduced to prevent VAT losses through ‘missing trader’ fraud when traders collect VAT on their sales but go missing before passing the VAT onto HMRC. The new rules will shift responsibility for paying VAT along the supply chain and will take effect from 1 October 2019.

Alternative method of VAT collection

The government is considering a ‘split payment’ model to reduce online VAT fraud by third country sellers and to improve how VAT is collected on cross-border e-commerce. An industry working group will be established to address some of the main challenges associated with this policy.

think ahead

Making Tax Digital (MTD) will start to apply to VAT for certain businesses from 1 April 2019. Consider taking advice on how you are affected and what your options are to deal with this major change.

AVOIDANCE, EVASION AND UNFAIR OUTCOMES

Profit fragmentation

As announced in last year’s Budget, the Finance Bill will legislate to prevent UK businesses from avoiding UK tax by arranging for their UK-taxable business profits to accrue to entities resident in territories where significantly lower tax is paid than in the UK. The taxable UK profits will be increased to the actual, commercial level.

R&D tax relief for small and medium-sized enterprises

From 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year.

Stamp taxes on shares: consideration rules

The government will consult on aligning the consideration rules of stamp duty and stamp duty reserve tax (SDRT) and introducing a general market value rule for transfers between connected persons. The aim will be to simplify stamp taxes on shares and to stop contrived arrangements being used to avoid tax. To prevent forestalling, from 29 October 2018, a targeted market value rule will be introduced for listed shares transferred to connected companies.

VAT grouping

Certain non-corporate entities will become eligible to join a VAT group from 1 April 2019. In addition, revised VAT grouping guidance will be issued:

to amend the definition of ‘bought-in services’ to ensure that such services are subject to UK VAT; and

to provide clarity to businesses on HMRC’s protection of revenue powers and treatment of UK fixed establishments.

Unfulfilled supplies

The VAT treatment of prepayments will change from 1 March 2019 to bring all prepayments for goods and services into the scope of VAT, where customers have been charged VAT but have not collected what they have paid for and have not received a refund.

VAT Regulation 38

Stricter rules will be introduced on how and when adjustments to VAT should be made following a price reduction and will ensure customers are issued with credit notes.

Electronic sales suppression

The government will consult later in the year on the misuse of electronic point of sale functions (i.e. till systems) to hide or reduce the value of individual transactions and the corresponding tax liabilities.

HMRC preferential creditor status

From 6 April 2020, when a business enters insolvency, HMRC will be treated as a preferential creditor in respect of taxes collected and held by businesses on behalf of other taxpayers (VAT, PAYE income tax, employee NICs, and construction industry scheme deductions). The creditor rules will remain unchanged for taxes owed by businesses themselves, such as corporation tax and employer NICs.

Tax abuse and insolvency

Following Royal Assent of Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixing will be jointly and severally liable for company tax liabilities where there is a risk that the company may deliberately enter insolvency.

Conditionality: hidden economy

Following consultation, the government will consider introducing in Finance Bill 2019-20 a tax registration check linked to renewal processes for some public sector licences. Applicants would need to provide proof they are correctly registered for tax in order to be granted licences.

International tax enforcement: disclosable arrangements

Legislation is being enacted to allow the introduction of international disclosure rules about offshore structures that could avoid tax or could be misused to evade tax.

Offshore tax compliance strategy

The government will publish an updated offshore tax compliance strategy.

After two full Budgets in 2017, this Spring Statement was a less dramatic affair, with no announcements of tax changes. These will come in the Autumn Budget.

The Chancellor launched a number of consultations and other papers about future proposals. The subjects ranged from ways to squeeze more tax from international digital businesses to a proposal for extending entrepreneurs’ relief to some shareholders whose holdings drop below the qualifying 5% level. He has also been mulling the possibility of lowering the VAT threshold.

April will see the usual changes to the income tax rates and allowances as well as national insurance contributions. This year there will also be a cut in the dividend allowance and some special new tax rates for Scottish taxpayers. The tax increases on company cars may look relatively modest, but their cumulative impact could be significant for some people.

Many employees will see the extra net income from the tax changes eaten up by their higher minimum auto-enrolment pension contributions. The lifetime allowance for pensions has been raised. Less welcome for some will be the changes to employee termination payments and the new rules for enterprise investment schemes.

If you have any questions about how the Spring Statement affects you, please get in touch.

As a limited company director, you can claim money from the company for use of home as office. You, personally, will not need to pay tax on this money and the company can claim tax relief for paying it.

You can claim for things to do with your work e.g. business telephone calls or the extra cost of gas and electricity for your work area. You can’t claim for things you use for both private and business use such as rent or broadband access.

You do not need to provide evidence for claims of up to £4 a week (£18 a month). For claims over this amount you will need to provide evidence of what you spent and how you calculated the proportion charged to the company.

For more details on use of home as office and other tax savings you can make contact Emma Stevens

All data and information provided in this advert is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

Autumn Budget 2017 – 22 November 2017

BUDGET HIGHLIGHTS

First time buyers of residential property outside Scotland will pay no stamp duty land tax on the first £300,000 of the purchase price for a home, provided its value does not exceed £500,000.

The personal allowance will rise to £11,850 and the higher rate tax threshold for the UK (excluding non-savings, non-dividend income in Scotland) will rise to £46,350 for 2018/19.

The pension lifetime allowance will be increased from £1 million to £1.03 million from April 2018. There will be no change to the annual allowance.

Venture capital trusts, enterprise investment schemes and seed enterprise investment schemes will be required to focus more on companies where there is a real investment risk.

The diesel supplement for company cars will be increased from 3% to 4% from April 2018.

Online marketplaces will become jointly and severally liable for unpaid VAT of UK traders as well as overseas traders.

There will be several changes to business rates, notably dealing with the ‘staircase tax’ and introducing valuations every three years.

@ Copyright 22 November 2017. All rights reserved. This summary has been prepared very rapidly and is for general information only. The proposals are in any event subject to amendment before the Finance Act. You are recommended to seek competent professional advice before taking any action on the basis of the contents of this publication.

INTRODUCTION

First budgets of a new parliament are traditionally the dramatic ones in which the Chancellor dispenses the unpalatable medicine of tax increases, because they are at the furthest point from the next election. However, for a variety of reasons, Mr Hammond did not follow the norm. Far from increasing the Exchequer’s income, the Budget Red Book reveals a net tax giveaway of just under £1.6 billion in the coming tax year.

His main headline-grabbing move was to give first time buyers an exemption from stamp duty land tax on the first £300,000 of consideration for properties worth up to £500,000. Some move on this front had been widely expected, and it accounts for over a third of the giveaway.

The Chancellor was less generous on the income tax front, increasing both the personal allowance and the higher rate threshold by 3% – the standard inflation-linked increase

e. He gave nothing away to individual savings account (ISA) investors, freezing the main ISA and lifetime ISA investment limits. Pension savers were luckier, with an increase in the lifetime allowance – the first since 2010 – and no changes to the annual allowance.

Venture capital schemes were again in the firing line, with a raft of measures designed to introduce a greater emphasis on risk investment to venture capital trusts, enterprise investment schemes and seed enterprise investment schemes. However, he took no action on inheritance tax business relief, which had been expected in some quarters.

If commentators suggest that this was a dull Budget, Mr Hammond will probably be pleased. After his national insurance U-turn following his March Budget, a steady-as-she-goes, broadly neutral Budget was likely to be his goal.

PERSONAL TAXATION

Income tax allowances and reliefs 2018/19 2017/18

Personal (basic) £11,850 £11,500

Personal reduced by £1 for every £2 of net income over £100,000 £100,000

6 Not available if taxable non-savings income exceeds the starting rate band.

Trusts 2018/19 2018/19

• standard rate band generally £1,000 £1,000

• dividends (rate applicable to trusts) 38.1% 38.1%

• other income (rate applicable to trusts) 45% 45%

Child benefit charge: 1% of benefit per £100 of income between £50,000 and £60,000.

Income tax

The personal allowance will increase to £11,850 and the higher rate threshold will rise to £46,350 for 2018/19. The Scottish tax bands and rates for non-savings, non-dividend income will be announced in the Scottish Budget due on 14 December.

Private sector off-payroll working

Following reform in April 2017 of the off-payroll working rules (IR35) for public sector engagements, the government will consult on extending the legislation to the private sector.

National insurance contributions (NICs)

The government will delay the implementation of the NIC reforms by one year as previously announced. Consequently, Class 2 NICs will continue to be payable in 2018/19.

Employment status

The government will publish a discussion paper in response to Matthew Taylor’s review of employment practices in the modern economy. The paper will examine the case and options for longer-term reform to make the employment status tests clearer for both employment rights and tax.

Benefits in kind: charging electric vehicles

From April 2018, there will be no benefit in kind tax charge on electricity that employers provide where employees recharge their personally-owned electric or hybrid vehicles at their workplace.

Taxation of employee business expenses

There will be several changes to the taxation of employee expenses:

The government will consult on extending the scope of tax relief currently available to employees and the self-employed for work-related training costs.

From April 2019, employers will not have to check receipts when reimbursing employees for subsistence using scale rates.

HMRC will improve the guidance on employee expenses, particularly on travel and subsistence, and the process for claiming tax relief on non-reimbursed employment expenses.

Termination payments: foreign service relief

Employees who are UK resident in the tax year their employment is terminated will not be eligible for foreign service relief on their termination payments. Reductions for foreign service will be retained for seafarers. The changes will have effect from 6 April 2018 and will apply to those who have their employment contract terminated from that date.

Rent-a-room relief

The government will call for evidence to establish how rent-a-room relief is used and to ensure that it is better targeted at longer-term lettings.

Mileage rates for landlords

With retrospective effect from 6 April 2017, individuals operating unincorporated property businesses can opt to use a fixed rate deduction for every mile they travel for business journeys by car, motorcycle or goods vehicle.

Gift aid donor benefit rules

The donor benefit rules that apply to charities that claim gift aid tax relief on donations will be simplified from April 2019. There will be two percentage thresholds: the benefit threshold for the first £100 of the donation will remain at 25%; for larger donations charities will be able to offer benefits worth up to 5% of the amount above £100. The total value of the benefit must not exceed £2,500.

Taxation of trusts

A consultation document will be published in 2018 on how to make the taxation of trusts simpler, fairer and more transparent.

saver

Don’t lose your personal allowance. Your personal allowance of £11,850 in 2018/19 is reduced by 50p for every pound your income exceeds £100,000. Make a pension contribution or a charitable gift to bring your income below £100,000.

PENSIONS, SAVINGS AND INVESTMENTS

Individual savings account (ISA) subscription limits

The ISA annual subscription limit for 2018/19 will remain unchanged at £20,000 and the lifetime ISA (LISA) annual subscription limit will stay at £4,000. The annual subscription limit for junior ISAs (JISAs) and child trust funds (CTFs) for 2018/19 will rise to £4,260.

Lifetime allowance for pensions

The lifetime allowance for pension savings will increase to £1.03 million for 2018/19. There is no change to the annual allowance.

think ahead

The lifetime allowance will rise by £30,000 from 6 April 2018. If you plan to draw from your pensions and already have funds exceeding the current £1 m lifetime allowance limit, you may want to wait before taking your pension benefits.

Life assurance and overseas pension schemes

From 6 April 2019, tax relief for employer premiums paid into life assurance products or certain overseas pension schemes will be extended to cover policies where an employee nominates an individual or registered charity to be their beneficiary.

Venture capital trusts (VCT) and enterprise investment schemes (EIS)

A range of changes were announced to VCTs, EISs and seed enterprise investment schemes (SEIS):

Risk to capital condition Legislation in the Finance Bill 2017-18 will ensure that VCTs, EISs and SEISs are targeted at growth investments. Relief under the schemes will be focused on companies where there is a real risk to the capital being invested, and will exclude investments in companies and arrangements intended to provide capital preservation. The changes will have effect from Royal Assent.

Increased limits for investments in knowledge-intensive companies The maximum an individual may invest under the EIS in a tax year will double to £2 million, where an amount of over £1 million is invested in one or more knowledge-intensive companies. The annual investment limit for knowledge-intensive companies receiving investments under the EIS, and from VCTs, will also double to £10 million, but the lifetime limit will remain at £20 million. Knowledge-intensive companies will be allowed to use the date when their annual turnover first exceeds £200,000 to determine the start of the initial investing period, instead of the date of first commercial sale. The changes will have effect from 6 April 2018, subject to state aid rules.

Relevant investments Current rules exclude certain investments made by VCTs and EISs before 2012 from counting towards the lifetime funding limits for investee companies. These provisions will be scrapped from 1 December 2017, subject to state aid rules.

Effect of anti-abuse provisions on commercial mergers of VCTs Legislation in the Finance Bill 2017-18 will limit the application of an anti-abuse rule relating to mergers of VCTs. This rule will no longer apply if VCTs merge later than two years after a subscription, or do so only for commercial reasons. The change will have effect for VCT subscriptions made on or after 6 April 2014, subject to state aid rules.

Other VCT reforms Several other changes will be made to move VCTs towards higher risk investments. For example, the proportion of VCT funds that must be held in qualifying holdings will rise from 70% to 80%; and 30% of the funds raised in an accounting period must be invested in qualifying holdings within 12 months of the end of the accounting period.

Master trust tax registration

From 6 April 2018, HMRC will have powers to register and deregister master trust pension schemes and pension schemes for dormant companies.

think ahead

The dividend allowance will be cut to £2,000 from 2018/19. Take advantage of the increased ISA allowance of £20,000 in the new tax year.

CAPITAL TAXES

Capital gains tax (CGT): annual exempt amount

The annual exempt amount for individuals and personal representatives will rise to £11,700 for 2018/19, while the amount for most trustees will increase to £5,850 (minimum £1,170).

CGT payment window

The introduction of the 30-day payment window between a capital gain arising on a residential property and the payment of the relevant CGT will be deferred until April 2020.

Inheritance tax

The inheritance tax nil rate band remains at £325,000 for 2018/19. The residence nil rate band will increase to £125,000 from 6 April 2018.

don’t forget

The inheritance tax residence nil rate band rises to £125,000 from 6 April 2018. Make sure your estate planning is reviewed to take account of this important change, which could save up to £140,000.

BUSINESS TAXES

Research and development (R&D)

The rate of the tax credit for (R&D) expenditure will rise from 11% to 12% from 1 January 2018. A new advance clearance service will be piloted for claims for R&D expenditure credit, to provide pre-filing agreement for three years.

think ahead

Your business might be entitled to a valuable R&D tax credit – even if it doesn’t make a taxable profit. Check out the position; you might be surprised what expenditure can qualify and how much it could be worth to you.

Corporate indexation allowance

The indexation allowance for corporate chargeable gains will be frozen for disposals from 1 January 2018 at the amount based on the retail prices index (RPI) for December 2017.

Substantial shareholding exemption

The substantial shareholding exemption legislation and the share reconstruction rules will be amended to avoid unintended chargeable gains being triggered where a UK company incorporates foreign branch assets in exchange for shares in an overseas company.

Gains on branch incorporation

An anomaly is being corrected whereby a postponed tax charge may have become payable when a new holding company was inserted directly above an overseas company, to which a UK company had previously transferred the trade and assets of a foreign branch in return for shares. The change applies to disposals from 22 November 2017.

Partnership tax

Legislation effective from 2018/19 will clarify the circumstances where the current rules for partnerships are seen as creating uncertainty. It will reduce the scope for non-compliant taxpayers to avoid or delay paying tax. The draft legislation published on 13 September 2017 has been revised to be more compatible with commercial arrangements for allocating profit, and to avoid additional administrative burdens.

saver

Check that you are still trading through the most appropriate vehicle for your circumstances. Incorporation makes sense for some people – but changes to dividend tax rules and NICs are altering the picture.

Disincorporation relief

The disincorporation relief introduced in 2013 for five years will not be extended beyond the 31 March 2018 expiry date.

Corporate tax and the digital economy

The government has published a position paper setting out its proposed approach to addressing the challenges posed by the digital economy.

Withholding tax: royalties

Withholding tax obligations will be extended to royalty payments and payments for certain other rights that are made to low tax or no tax jurisdictions in connection with sales to UK customers. The rules will take effect from April 2019 and will apply regardless of where the payer is located.

Hybrid mismatch rules

Some aspects of the corporation tax rules that apply to arrangements involving hybrid structures and instruments – because of differences in tax treatment between two jurisdictions – will be amended to clarify how and when they apply and ensure they operate as intended.

First year tax credits

The first year tax credit scheme will be extended until the end of this parliament to encourage loss-making companies to invest in energy-efficient technology. The credit rate will be set at two-thirds of the rate of corporation tax.

Zero-emission goods vehicles

The government will extend the first year allowances for zero-emission goods vehicles and gas refuelling equipment to March/April 2021.

Company cars and vans

The company car benefit in kind diesel supplement will rise from 3% to 4% with effect from 6 April 2018, except for cars that meet the real driving emissions step 2 (RDE2) standards. The fuel benefit charge and van benefit charge will increase by the September 2017 RPI from 6 April 2018.

Air passenger duty

Short-haul air passenger duty rates for 2019/20 will remain frozen. The long-haul rate for economy passengers will be frozen at the 2018/19 levels. The charges for premium economy, business and first class will increase by £16 and will increase by £47 for those travelling by private jet.

National insurance contributions employment allowance

From 2018, HMRC will require upfront security from employers with a history of avoiding paying NICs by abusing the employment allowance, often by using offshore arrangements.

Disguised remuneration

Disguised remuneration avoidance schemes used by closely held companies will be countered by the introduction of the close companies’ gateway from April 2017. All employees and self-employed individuals who have received a disguised remuneration loan will be required to provide information to HMRC by 1 October 2019.

Intangible fixed assets: related party step-up schemes

The intangible fixed asset rules will be updated with immediate effect, so that a licence in respect of intellectual property between a company and a related party is subject to the market value rule. The market value rule will also apply where consideration is not in cash.

Depreciatory transactions

The six-year time limit within which companies must adjust for transactions that have reduced the value of shares being disposed of in a group company, has been removed for disposals of shares or securities in a company from 22 November 2017. This is intended to ensure that any losses claimed are in line with the actual economic loss to the group.

Carried interest

The transitional commencement provisions have been removed with immediate effect to prevent avoidance of the legislation designed to ensure that asset managers receiving carried interest pay CGT on their full economic gain.

Corporate interest restriction

Technical amendments will be made to the corporate interest restriction rules to ensure that the regime works as intended. Some of these amendments will be backdated to 1 April 2017 and the remainder will have effect from 1 January 2018.

Extension of security deposit legislation

Existing security deposit legislation will be extended to corporation tax and construction industry scheme deductions from 6 April 2019.

Double taxation relief

From 22 November 2017, a restriction has been introduced to the relief for foreign tax incurred by an overseas branch (permanent establishment) of a company, where the company has already received relief overseas for the losses of the branch against profits that are not those of the branch. This ensures that the company does not get tax relief twice for the same loss. The double taxation relief targeted anti-avoidance rule will also be amended to remove the requirement for HMRC to issue a counteraction notice, and extend the scope to ensure it is effective.

With effect from Royal Assent to the Finance (No 2) Act 2017 on 16 November 2017, the powers giving effect to double taxation arrangements have been amended to allow implementation of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS).

think ahead

Automatic enrolment pension minimum contributions increase significantly from 6 April 2018. Make certain you – and anyone you employ – are aware of the consequences.

PROPERTY TAXES

Stamp duty land tax (SDLT)

A new relief from SDLT will raise the price at which a property becomes liable for SDLT to £300,000 for first-time buyers. Those claiming the relief will pay no SDLT on the first £300,000 of the consideration. No relief will be available where the total consideration is more than £500,000. The relief applies to transactions with effect from 22 November 2017.

The operation of the higher rates of SDLT for additional properties will be amended to give relief for various people including: those increasing their share of their own home, families affected by a divorce court order, spouses buying property from their spouse and cases where properties are held in trust for children subject to Court of Protection orders. A new rule will target the abuse of relief for the replacement of a purchaser’s only or main residence by requiring the purchaser to dispose of the whole of their interest in their former main residence to someone who is not their spouse. These changes take effect from 22 November 2017.

The previously announced reduction in the SDLT filing and payment window from 30 days to 14 days will apply from 1 March 2019.

Business rates in England

Businesses that occupy more than one floor in a building that have been affected by the so-called ‘staircase tax’ will be able to ask for their valuations to be recalculated so that they are based on previous practice backdated to April 2010. This will include those who lost small business rate relief.

The switch in indexation from RPI to consumer price index (CPI) is being brought forward to 1 April 2018. The £1,000 business rate discount for public houses with a rateable value of up to £100,000 will continue for one year from 1 April 2018. This is subject to state aid limits for businesses with multiple properties. Non-domestic properties will be revalued every three years following the next revaluation due in 2022.

Annual tax on enveloped dwellings (ATED)

The ATED annual charges will increase by 3% from 1 April 2018 in line with the September 2017 CPI.

Gains by non-residents on UK property

All gains on non-residents’ disposals of UK property will be brought within the scope of UK tax. This will apply to gains accrued from April 2019. There will be targeted exemptions for such institutional investors as pension funds.

Taxation of non-resident companies’ UK property income and gains

Non-UK resident companies’ income from UK property will be chargeable to corporation tax rather than income tax from 6 April 2020. From the same date, gains that arise to non-resident companies on the disposal of UK property will be charged to corporation tax rather than CGT.

think ahead

Half of any interest tax relief for personal buy-to-let borrowing will be limited to a 20% tax credit from 2018/19. Make sure you understand the impact of this latest change on your overall tax position.

VALUE ADDED TAX

Registration and deregistration thresholds

Until 31 March 2020, the taxable turnover threshold for registration for value added tax (VAT) will remain at £85,000 and the deregistration threshold will stay at £83,000. The registration and deregistration thresholds for relevant acquisitions from other EU member states will remain at £85,000. The government will consult on the design of the VAT threshold.

Online VAT fraud

Three measures aimed at tackling online VAT fraud will take effect from Royal Assent in spring 2018:

HMRC’s existing powers to hold online marketplaces jointly and severally liable for the unpaid VAT of overseas traders on their platforms will be extended to include UK traders.

Online marketplaces will also be jointly and severally liable for VAT of a non-UK business that sells goods on their platform and fails to account for the tax. This will apply where the business was not registered for VAT in the UK and the online marketplace knew (or should have known) that the business should be registered for VAT in the UK.

Online marketplaces will have to ensure that VAT numbers displayed for businesses operating on their website are valid. They will also have to display a valid VAT number when they are provided with one by a business operating on their platform.

The government is consulting on further measures to prevent non-compliance among users of digital platforms.

VAT fraud in labour provision in the construction sector

A VAT domestic reverse charge will be introduced from 1 October 2019 to prevent VAT losses in construction labour supply chains. This will shift responsibility for paying VAT along the supply chain to remove the opportunity for it to be stolen. The government will publish and consult on the legislation and guidance during 2018.

Vouchers

Changes will be made to simplify the VAT treatment of vouchers from 1 January 2019, including the point at which they will become subject to VAT and, in some cases, their value for taxation.

saver

The flat rate VAT scheme is changing for ‘limited cost traders’ from 1 April. Take advice on what your options are to counter an effective tax increase.

TAX ADMINISTRATION AND COMPLIANCE

Making Tax Digital (MTD)

No business will be required to use MTD until April 2019. From that date, only those with turnover above the VAT threshold (£85,000) will have to use MTD, and then only for VAT obligations. The scope of MTD will not be widened until the system has been shown to work well, and not before April 2020 at the earliest. Businesses, self-employed individuals and landlords within MTD will have to keep digital records and update HMRC quarterly.

Late submission penalties and late payment interest

The penalty system for late or missing tax returns will change to a points-based approach. The government will consult on simplifying and harmonising penalties as well as interest on late payments and repayments.

Closure of Certificate of Tax Deposit scheme

The Certificate of Tax Deposit scheme is closed for new certificates from 23 November 2017. Existing certificates will be honoured for six years.

Recovery of self-assessment debt

HMRC will use new technology to recover additional self-assessment debts in closer to real time by adjusting the tax codes of individuals with pay as you earn (PAYE) income. This will take effect from 6 April 2019.

Extending offshore time limits

Following a consultation in spring 2018, assessment time limits for non-deliberate offshore tax non-compliance will be extended, so that HMRC can always assess at least 12 years of back taxes without needing to establish deliberate non-compliance.

Hidden economy

The government will consult further on how to make the provision of some public sector licences conditional on being properly registered for tax.

Marriage allowance allows you to transfer £1,150 of your personal allowance to your husband, wife or civil partner, reducing their tax by £230.

Who will benefit? If you earn less than £11,500 a year and your partner earns between £11,501 and £45,000 you could be better off by applying for marriage allowance. You need to be married or in a civil partnership to apply.

You can apply for the marriage allowance online via www.gov.uk/apply-marriage-allowance If successful the change will be backdated to the beginning of the tax year (6 April) and the change will be reflected in your tax code.

If you complete a tax return you can opt for marriage allowance for 2016/17 via your personal tax return which is due for filing by 31st January 2018.

If your circumstances change you, such as your partner earning more than £45,000 or you earning more than £11,500 then you can apply to cancel your marriage allowance online.

If you need any advice on tax please get in touch with Emma Stevens at Emma Stevens Accountancy.

All data and information provided in this advert is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

If you sell something (such as a property, painting or land), for more than you brought it for, you pay a tax called Capital Gains Tax on the increased value.

What assets do I need to pay capital gains tax on?

Capital gains tax is paid on the gain when you sell:

A property which isn’t your main home

Your main home if you’ve ever let it out, it’s very large or used it for business.

Shares

Business assets

Personal possessions worth more than £6,000 such as jewellery, paintings, antiques and sets of things such as matching vases

What assets are not liable to capital gains tax?

You don’t have to pay capital gains tax on:

your car, unless you used it for business.

your main home, except in the instances above.

anything with a limited lifespan of less than 50 years

gifts to your husband, wife, civil partner or a charity

ISAs or PEPs

UK government gilts and premium bonds

Betting, lottery or pools wins

Gains under your annual tax free allowance (£11,300 for 2017-18)

How do I report a gain to HMRC?

If you are registered for self assessment you complete the capital gains tax pages. You will then need to pay the tax due on the gain by 31st January (2018 for gains in the tax year 2016-17). If you don’t complete a self assessment return you will need to report your gain to HMRC through the government gateway online portal.

How much capital gains tax will I pay?

Higher rate tax payer pay 20% capital gains (28% on residential properties). If you’re a basic rate tax payer you will pay 10% (18% on residential properties) if the amount is within your basic income tax band. If the amount means you go into the higher rate tax band you will pay the higher rates on the part which is in the higher rate band.

Reliefs against capital gains tax

There are some reliefs against capital gains tax which may be available in some circumstance such as selling a rental property which you previously lived in. It’s always best to consult a tax expert to ensure you don’t over pay your tax.

All data and information provided in this advert is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

A Self-assessment tax return is the form an individual completes to report to HMRC their income for the year and to calculate how much tax is due on that income. In the UK, the tax year runs from 6th April to 5th April the following year. So, for 2016-17 the period covered is 6th April 2016 to 5th April 2017. Not all UK residents are required to do a tax return. If your only income is as an employee you don’t need to worry about it. However, there are some situations which do require the completion of a return and this article should guide you through them.

Do I need to do one?

You are required to complete a Self-assessment tax return if you come under the following categories:

·Self employed.

·Have untaxed income such as rental income exceeding £2,500

·Your income from shares, savings or investments exceeds £10,000

·You’re a company director

·You made a chargeable gain such as selling a 2nd home

·Your income is over £100,000 (or £50,000 and you/your partner claims child benefit)

·You have income from abroad or you live abroad and have UK income

What do I need to do?

If you fall into one of the above categories you must complete a tax return each year by 31 January. So, for tax year ending 5 Apr 2017, your tax return must be completed and sent to HMRC, online, by 31st January 2018 (paper versions must be filed by 31st October).

You need to include all your income on your tax return, not just the income which hasn’t been taxed

When do I pay

HMRC must be paid the balance of tax due by 31st January following the end of the tax year (31st January 2018 for the tax year ending 5 April 2017).

If you owe under £3,000 in tax and pay tax through the PAYE scheme you can ask HMRC to collect the tax owed through your pay code, as long as you submit your tax return by 31st December following the end of the tax year. HMRC will only apply this if you have enough PAYE income for it to be collected.

You will be required to make a payment on account towards your tax bill for the following year if your self-assessment bill is more than £1,000. Each payment on account is half your previous year’s tax bill. These payments are due on 31st January and 31st July. If you still have tax to pay after you’ve made your payments on account this balancing payment is also due by 31st January.

I need to do a tax return how do I tell HMRC

How you register depends on the reason you are registering. If you are registering because you are self-employed you need to complete the form CWF1 online. If you’re not self-employed you need to complete the form SA1. You must register by 5th October if you need to complete a tax return for the last tax year (5th October 2017 for the tax year ending 5th April 2017).

How can an accountant help me?

An accountant can help you in many ways with your tax return. Firstly, they will save you the time and hassle of doing it yourself. A good accountant will also know what you can and can’t claim against your taxable income and they will advise you accordingly. An accountant will register as your agent and can speak to HMRC on your behalf, saving you hours of waiting on hold if you have a problem! To find out more contact Emma Stevens

All data and information provided in this advert is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

If you’ve made the decision to become VAT registered, there are a few changes that you’ll have to start making straight away to the way you run your business. The obvious one is that you’ll need to add an extra 20% to the price of your goods or services.

There are exemptions to this rule like food, books, newspapers and magazines, young children’s clothing and footwear which don’t attract VAT, so if you also sell any of those products, you won’t add anything to the price.

You need to start charging VAT from the day you register for VAT, too. Don’t wait for the certificate to arrive as this can take some time, and you’ll have a shortfall in what you pay and what you charge your customers if you wait for the certificate.

If you send out sales invoices, while you wait for your certificate, you can still add the VAT but you’ll need to show a total figure including sale amount and VAT as one amount. When you receive the certificate with your VAT number on it, you can reissue your invoice with the correct details, separating VAT from sale price, and this allows your customers to claim back the VAT they pay you.

Filing VAT Returns

Being VAT registered means extra paperwork. Every quarter you’ll have to complete a VAT return for HMRC – it can be done online these days which makes it easier. The return needs to show your ‘output’ tax, which is the total amount of VAT you’ve charged to your customers. You also include any VAT you’ve paid on things you’ve bought for your business that you want to reclaim – this could be your stock, supplies or anything business related. This is called ‘input’ tax.

Your quarterly return needs include all income invoices you’ve raised during the quarter, not just the money you’ve actually received. HMRC then tells you whether you need to pay them any VAT, based on whether your inputs are more than your outputs.

The Cash Accounting Scheme

If you don’t want to pay your VAT until you’ve been paid for your goods or services, you might qualify for the cash accounting scheme. You can only use this scheme if your annual turnover is less than £1.35 million.

The scheme is similar to standard VAT returns, except that you won’t claim or reclaim the VAT on unpaid invoices. If you invoice a customer in March but you aren’t paid until May, that business is included in a later tax return, not the return you would file at the end of the March quarter

The benefit of using the cash accounting scheme is mainly that it makes your business cash flow a little easier. You’ll only have to pay HMRC their VAT once you’ve actually received it from your customers, so you won’t have to find large amounts on unpaid bills.

You will, of course, not be able to claim anything back on your purchases until it’s paid. If you decide to leave the scheme, you won’t be able to do so until you’ve paid any outstanding VAT to HMRC.

For advice on VAT and other accounting issues, contact Emma at Emma Stevens Accountancy for a friendly chat.

All data and information provided in this advert is for informational purposes onlyand is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

If you pay any expenses or offer employee benefits to your staff members, you must make sure that they are properly declared to HMRC and the right tax is paid on them. Many types of employee perks are taxable and if you don’t submit the right paperwork on time, you could end up with a hefty fine.

Some of the benefits and expenses that are included are:

Travel expenses

Entertainment expenses

Childcare costs

Company cars

Employee health insurance

Reporting and paying

Depending on the type of benefits or expenses you give your employees, different rules apply for reporting them and paying tax on them.

Normally, you’ll submit a form to HMRC for every employee you’ve given expenses or benefits. The form is called a called a P11D and has to be submitted at the end of every tax year.

There’s a further form called a P11D (b) and this needs to be completed if:

you’ve submitted P11D forms for any employees

you’ve paid any of your employees’ expenses through your payroll

you’ve been sent a P11D(b) form by HMRC

The P11D(b) just tells HMRC how much Class 1A National Insurance you must pay on the benefits and expenses you’ve given. You can let HMRC know that you don’t owe any Class 1A National Insurance by completing a declaration.

How to pay tax through the payroll

If you register with HMRC before 6th April it’s possible to deduct any tax on most employee benefits and expenses though the payroll. If you do this, and you pay tax on all of their benefits and expenses directly via payroll, you won’t have to fill in the P11D form. You’ll still have to complete and submit the P11D (b) to pay the Class 1A National Insurance.

What you need to report

Different types of expenses and employee benefits are all reported differently, and there’s an A-Z of different benefits available on the GOV.UK website which will help you choose the right way to report and pay it. https://www.gov.uk/expenses-and-benefits-a-to-z

For ‘minor’ expenses or employee benefits, you could be able make a one-off payment called a PAYE Settlement Agreement.

You can normally report using:

commercial payroll software

HMRC’s PAYE Online service

HMRC’s Online End of Year Expenses and Benefits service

You can also download and fill in forms P11D and P11D (b) and send them to HMRC.

Be careful: If you’re late filing the information you could get a penalty of £100 per 50 employees for each month or part month your P11D (b) is late.

It’s very important to make sure that you keep accurate records of everything you give your employees by way of expenses and benefits. You must be able to prove to HMRC that your reports are accurate and that your end of year forms have been properly completed. Sometimes HMRC ask to see evidence of this, too.

Things you’ll need to make a record of include:

dates and details of every expense or benefit you’ve given

information about how you worked out the amounts to put on your end-of-year forms

payments that your employees contribute themselves to an expense or benefit

You must keep these records for three years from the end of the tax year they relate to.

Exemptions

Some expenses and benefits don’t need to be reported, and they include;

business travel

telephone bills

entertainment expenses relating to business

tools or uniforms that are used for work

To qualify you must be paying a flat rate to your employee as part of their earnings – either a benchmark rate or a rate approved by HMRC, and paying the actual costs incurred by the employee.

For more advice and guidance, contact Emma Stevens Accountancy.

All data and information provided in this advert is for informational purposes onlyand is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

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Emma Stevens Accountancy has been my accountant for approximately 5 years and I have always found her very professional in her approach to my business. She carries out all my requirements speedily and efficiently and I have recommended her in the past to some of my friends looking for a similar service.

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Laker Development Management Ltd

Emma Stevens Accountancy has completed my last two years self employment accounts. The service I have received has been exceptional. The company has liaised with both myself and HMRC to submit my accounts. I would highly recommend this company for their personal service, efficiency and professional approach.

A Rooney

Emma has taken a great weight off my shoulders by untangling a mess of several years’ non-submission of tax returns. She even managed to secure me a large rebate in the process and continues to keep my liability to an absolute minimum. Very personable and professional!

I Simpson

Emma is great at keeping tracks of my accounts. She is very efficient and gives great advice. Emma is an experienced accountant, always willing to give advice and guide you to grow. Well done Emma.

F Kernan

After 10 years in the Kitchen industry I decided to look into the possibilities of setting up my own kitchen business. After extensive research and planning, one of the main things stopping me from ‘making the move’ was the accounting side of things. I have always been a bit scared of Tax, VAT, and HMRC in general and this was the main delay in my decision. I had heard of Emma Stevens locally and thought I’d drop her an email to find out what she could do to help. During our meeting Emma gave me some very helpful information and tips on how to get everything up and running. This was before we’d even discussed me using Emma as my accountant. The advice she gave made me so much more confident about what I was doing and she could see that I could be onto something good. After leaving the meeting with Emma I decided to go ahead and make that big move. Emma has made it all so very simple. She now manages my PAYE, my VAT and TAX Returns so I don’t have to worry. Every time I have had a question, she replies within a few minutes. I am now running what I would call a growing successful business. I wouldn’t be enjoying it half as much if I didn’t have Emma there to back me up and help where needed.